Comparing Careers in Investment Banking vs Corporate Finance

By October 8, 2017Trading
Investment Banking vs Corporate Finance

Understanding Differences in Job Responsibilities, Hours and More

Investment banking and corporate finance both present attractive career options — they can both be lucrative, challenging and exciting jobs that present plenty of opportunities for growth. Finance students will find either option very promising, as success is all but guaranteed as long as you’re willing to work hard. The background and skills required are similar, and oftentimes professionals in finance will move from one field to the other at some point in their careers.

Differences in job responsibilities

One big difference between corporate finance and investment banking is that the corporate side of the field is much more varied. There are a wide range of jobs that are considered to be a part of the corporate finance umbrella. These include accountants, account managers, business analysts, treasurers and more. The investment banking career path, on the other hand, is a much narrower field.

The differences between job responsibilities boil down to the basic purpose of each role. Professionals in corporate finance manage the the finances of a company and oversee the day to day operations. Investment bankers concern themselves with growing the wealth of a company and raising capital through venues like mergers and acquisitions.

Generally, though both fields require high levels of education and talent, investment banking is the more demanding. Due to the emphasis on deal-making, bankers must possess excellent communication skills and be an ace at negotiations. This charisma and confidence must come on top of excellent math skills and highly detailed knowledge of the ins and outs of markets and financial regulations.

Comparing hours and workload

Investment banking can be considered the more prestigious branch of finance, but it comes at a price. Banker careers are notoriously cutthroat and your firm will demand long hours. From the very beginning, entry-level financial analysts are shouldered with massive workloads that many find overwhelming. Burnout is highly common within a few years of starting off in the investment banking field.

Even getting a job in the first place is difficult. Many investment banks recruit their new hires from top-level Ivy League students. There are fewer investment banking jobs and more competition than in the corporate finance career path.

Work hours in corporate finance vary depending on the exact role, but most corporate positions are significantly less demanding than investment banking, with steadier hours and less pressure. It can still be challenging to maintain work-life balance with a career in corporate finance, but it is more manageable than investment banking — which practically requires you to be a workaholic. Additionally, the variation in job roles within corporate finance means it’s more likely that you’ll find a position better tailored to your particular interests, talents and level of ambition.

Comparing salaries

The investment banking salary does balance out the long hours and oppressive workloads. Despite variation in the average salary of a corporate finance professional, investment banking careers are undoubtedly more lucrative. It’s well-known in the industry for being one of the best-paid jobs available. On the other hand, corporate finance jobs still pay well above the median income, and many young professionals find it a fair tradeoff for the more reasonable work hours.

Switching between investment banking and corporate finance

Many corporate analysts did work in investment banking at one point, or tried to. Due to the more competitive nature of investing, some young professionals find the job hunt discouraging and choose to take a job on the corporate side instead. Others simply find after time that the additional hours and stress aren’t worth the higher salary, and choose to switch. Conversely, after working your way up in a corporate finance job, it can also be possible to move into investment banking.

The good news for finance students is that both career paths are excellent options for anyone willing to work hard and devote their energy to their job, and it’s not difficult to move between them if you change your mind over time.

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